Kochhar & Co. India India’s Stand on Emergency Arbitrators and Emergency Awards India’s Stand on Emergency Arbitrators and Emergency Awards
by Nishant Menon, Nikhil Bhatia
Published: October, 2021
Author(s) Senior Partner, Nishant Menon and Associate, Nikhil Bhatia The Supreme Court of India on 6th August 2021 in Amazon.com NV Investment Holdings LLC v Future Retail Limited & Others handed down a seminal decision in relation to enforcement of an Emergency Arbitrator’s (“EA”) award. The ruling has great significance as it furthers India’s mission of being a pro-arbitration State where there is greater ease of doing business. Also, it brings India into focus across common law jurisdictions as it sheds much needed light on the status and powers of an EA internationally wherein a case is made that it should be treated as a species of arbitrator and not a creature unlike it. Below, we briefly recount, analyze and comment upon the widely celebrated landmark judgement. Brief Facts and Procedural History Future Retail (“Future”) and Amazon signed a Shareholder’s Agreement on 12th August 2019 (“Agreement”) based on which Amazon made an investment in Future’s retail assets. This Agreement included an arbitration clause which stipulated that any dispute would be resolved under the aegis of Singapore International Arbitration Centre (“SIAC”) and with New Delhi as the seat. Subsequently, Future struck a deal with Reliance on 29th August 2020 which would entail the former’s cessation and its amalgamation with the latter. According to Amazon, by agreeing to this deal Future had breached the terms of their Agreement as they asserted that,
In pursuance of the same, Amazon invoked emergency arbitration (which was permitted under SIAC’s Rules to grant interim protection) on 5th October 2020 to restrict the Reliance deal from going through. Upon hearing both parties, the EA adjudicated in favour of Amazon on 25th October 2020 and passed an interim order granting relief to them by restricting Future to go ahead with its deal with Reliance till the matter was resolved by a regular Arbitral Tribunal as envisaged under the Agreement. Disappointed with this outcome and without waiting for the constitution of an Arbitral Tribunal, Future approached the Delhi High Court to vacate the EA’s stay order. The interim relief sought by Future was denied at this stage as the High Court by its order of 21st December 2020 upheld the validity of the EA order. It was also of the opinion that the other arguments advanced by Future with respect to the merger’s sanctity had been or were being considered by various statutory bodies like the Competition Commission of India, the National Company Law Tribunal as well as the Securities and Exchange Board of India, and that they should continue to do so without the Court’s intervention. Further bolstered by this outcome, an application under Section 17(2) of the Arbitration and Conciliation Act, 1996 (“Act”) to enforce the award by the EA was filed by Amazon wherein the High Court on 2nd February 2021 deemed the order to be legitimate and thus enforceable under the aforementioned section which gives an interim order of an arbitral tribunal the status of a court decree to facilitate execution. Aggrieved by this, Future approached Delhi High Court’s Division Bench in appeal which stayed the Single Judge’s order for enforcement on 22nd March 2021. Consequently, Amazon filed a Special Leave Petition before the Supreme Court of India. While it examined the petition, on 19th April 2021 the Supreme Court stayed proceedings of the lower courts while allowing the National Company Law Tribunal to keep working on determining the viability of the merger but instructed it to not pass any orders during the petition’s pendency. We now move towards the Apex Court’s decision in the matter on August 6, 2021. Judgment The Supreme Court identified two core issues that were to be decided-
The Apex Court answered the first question in the affirmative, and the latter in the negative. Some of the salient points noted by the Supreme Court (“Court”) while coming to this conclusion are as follows:
Conclusion This is a landmark decision of great significance for dispute resolution in India. The ruling allows for India-seated arbitrations to conduct emergency arbitrations as the courts will now treat their orders at par with those of an arbitral tribunal, without requiring intervention from the legislature. It could potentially be a big step towards making India a hub for arbitration as parties dealing commercially in India will look at domestic-seated arbitrations in a more favorable light. This is also likely to be a shot in the arm for domestic arbitrations under the aegis of institutions as only institutional arbitrations provide for emergency arbitration in their rules.
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